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Set up severance pay
Article ID: 1000350
PrintOverview
This article explains how to set up severance pay for an employee who is being terminated.
Assumptions
An employee has been terminated from your company and you have agreed to severance pay as part of the separation agreement.
Expected Outcome
You will create a payroll item for severance pay.
Details
To set up a new payroll item for severance pay:
Add a new payroll item.
Select Custom Set Up and click Next.
Select Wage Item and click Next.
Select Bonus (this allows for a flat amount of pay without requiring hours or a quantity and doesn't interfere with the salary amount).
A Bonus type doesn?t change the way the item is taxed. Severance pay is not taxed at the supplemental rates for either federal or state withholding.
Click Next.
Select the Expense Account and click Finish.
Create Severance Check
In QuickBooks Premier, Pro and Simple Start:
- Click the Employees drop-down menu.
- Select Pay Employees and click Unscheduled Payroll.
- Create the paycheck for the employee using the Severance Pay earnings item.
